A cost segregation study saved a restaurant over $246,000 in current year income tax savings!
Recently, the new owners of the Pineapple Grill Restaurant contacted us at Segregation Holding to see if we could help save the restaurant money. The owners of this seafood restaurant were wondering if a cost segregation study would be beneficial to them. The results from our study far exceeded these new owners expectations and we are excited to share those results with you.
A cost segregation study is the process of identifying all assets eligible for accelerated depreciation. During this process a member of our team of professional engineers will come to the business location and perform a detailed site survey. This process involves taking photographs and/or video to document assets for the IRS. Additionally, the engineer will run laser measurements to verify the property boundaries. Did you know that your CPA probably chose to combine all assets into a lump sum. The results will depreciate over the standard 39 years. This is where a cost segregation study would come into play.
By shortening the depreciation period of qualified assets all businesses will be save a tremendous amount of money. Our team will identify tangible personal property assets that will qualify for a 5 or 7 year depreciation. All qualifying land improvements will depreciate over 15 years per IRS guidelines. Let’s look at how this income tax savings method worked for the Pineapple Grill Seafood Restaurant.
Our initial benchmark estimate revealed a potential reallocation of about 20%. This equaled a huge depreciation adjustment of $311,425. Based on the 39.6% income tax bracket the projected tax benefit for the first year alone was over $122,000 with $73,334 in current net present value tax savings. Needless to say, the new owners of Pineapple Grill were extremely pleased. In the beginning they were skeptical, but the results proved their initial decision to be right.
So, it was with great pleasure that our final results showed even more savings. The end result gave a total accelerated depreciation of $626,854, which is 39.2% of the original asset. This went to 5 and 15 year property. As a result the restaurant owners will be able to save $246,709 in current year income taxes. Their net present value savings was $203,095. Wow, what an amazing success story, not to mention a tremendous amount of money saved!
If you own a profitable restaurant or other type of business and would like to start lowering your income tax burden as well as increasing your cash flow, why not contact us today! We are so sure that our methods will work for your business that we even offer a guarantee. So, go ahead and request your free quote today. We look forward to working with your business and saving you as much as we can!
Contact us at 972-897-8019 or 443-Cost-Seg.